Consumer Phrase of the Day: ‘Licensing Effect’

While you may have never heard of this expression, it explains why, during the season focused on gift giving, you’re probably going to selfishly get something for yourself in the course of holiday shopping excursions.

A BusinessWeek story explains the concept, in which consumers enter into a frenzied dog-chasing-tail circle of generous-selfish behavior, by feeling like they personally deserve an indulgent reward each time they unselfishly purchase a gift for someone else:

Psychologists call this the licensing effect. In essence, the idea is that doing something that feels virtuous (like buying someone else a present) makes us feel unconsciously entitled to do something self-indulgent (like buy ourselves a present, which can then make us feel that we need to do something virtuous again, like buy someone else a present). As the holidays draw closer, the process can feed on itself in a steady loop of spending.

By this reasoning, one of the most selfish things you can do is unselfishly buy a gift for someone else—thereby justifying a little something for yourself. Retailers don’t really care whether you’re motivated by selfishness or the spirit of giving, so long as you’re spending in as steady and expensive a loop as possible.